Finding Policy That Works

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This is, without a doubt, one of the most sane things I have read in a long, long time. I hope Congress gets the New York Times. Or at least has an institutional digital subscription.

Money quote:

“….The place where economic knowledge gets murkier is how to best deal with many of our biggest problems.

We cannot know, for example, what would happen if the government raised taxes to cut the deficit. A moderate increase seems unlikely to do much damage to economic growth, given that the increases by George H. W. Bush and Bill Clinton did not prevent the 1990s boom — and that George W. Bush’s tax cuts were followed by mediocre growth. All things equal, though, tax increases do not lift growth.

Likewise, we do not know precisely how to regulate Wall Street so that it will remain the global financial capital without also being a drain on our national resources. We do not know whether the most promising attack on climate change involves a carbon tax or more money for clean energy research. We don’t know how much medical costs would fall if people had to pay more out of pocket, as conservatives advocate, or how much costs would fall if Medicare tried to crack down on dubious care, as the Obama administration prefers.

The real problem with so many of these issues is that the political system is not even trying to find solutions.”

This, by the way, is the reason I am passionate about policy and politics. Solutions are hard to find. They require an open mind, research and rational discussion. In comparison, politics is easy.

Sorry I haven’t posted in awhile, but it looks like I needed a little break to think about what I really want to write about. It turns out – I want to write about more than just policy.

Here’s the thing. These past few weeks I’ve wanted to write about something but I felt like I couldn’t because this blog was “supposed” to only be about policy. That is silly. No one reads this anyway so I should just write about what I want.

So, here we are. The Policy Scorecard is going to be about policy, sure, but also about whatever else I am passionate about that day of the week. Enjoy!

Today, puzzles vs. mysteries.

I was reading an article by Gregory Treverton, RAND’s director of Global Risk and Security, entitled “Risk and Riddles.” It’s fascinating. Here’s the distinction between “puzzles” and “mysteries” that Treverton lays out, as simply as possible:

The Soviet Union was a puzzle. Al Qaeda is a mystery.

Okay, that’s not enough. A bit more:

Puzzles can be solved; they have answers.

But a mystery offers no such comfort. It poses a question that has no definitive answer because the answer is contingent; it depends on a future interaction of many factors, known and unknown. A mystery cannot be answered; it can only be framed.

This distinction is more than just academic puffery. Understanding the difference helps us respond better. For example, while puzzles are frustrated by too little information, mysteries often occur as a result of too much. The “noise” confounds us. We pay attention to the wrong details and lose our bearings. Mysteries require synthesis while puzzles require analysis.

My addition – I think that more often than not mysteries are actually made up of puzzles. More on that later.

Treverton goes on to give great examples of this distinction at work in national security. Perhaps we would have ascertained that Iraq did not have WMDs, for example, if we had approached the question not as a puzzle (Where are the WMDs? How many WMDs are there?) but as a mystery (Why would Saddam Hussein claim to have WMDs? Is there a compelling reason that he might falsely claim to have WMDs?). The question changes from one about technical details to one about psychology.

I think this distinction is useful in the technology world, also.

Computers are very, very good at solving puzzles. Better than humans are. But my guess is that humans are still better at resolving mysteries. We are better at synthesizing and innovating. And, indeed, if mysteries are made of puzzles to be solved, computers will be very good partners to have.

It’s too tempting to start writing about the singularity and Star Trek so I think I should stop. But more thoughts on this later. I have a feeling this distinction will become more and more important.

In the week since I started this blog, I’ve already opined, not once but twice, on what the real substance of the health care debate should be. Still, after reading Atul Gawande’s New Yorker article on ballooning health care costs (I know I’m a bit late to the party, here) and Robert Pear’s New York Times article about Medicare’s new payment plan, I felt the need to pile on once again.

Gawande’s piece tells the first part of the story – health care costs and health care quality are not aligned:

Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.

Yes, you read that right. The more money spent per person the worse the quality of care tends to be.

To be clear, this relationship is not causal – that is, when doctors spend less care does not magically improve. But it turns out that hospitals that focus on doctor accountability, cross-functional collaboration and patient health, as opposed to profits, provide better care for less.

Of course, because every economic incentive opposes their existence, bastions of well-managed care like the Mayo Clinic are surprisingly difficult to create.

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

This plan has drawn fire from hospitals, which say they have little control over services provided after a patient’s discharge — and, in many cases, do not even know about them. More generally, they are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

A major goal of the new health care law, often overlooked, is to improve “the quality and efficiency of health care” by linking payments to the performance of health care providers. The new Medicare initiative, known as value-based purchasing, will redistribute money among more than 3,100 hospitals. (My emphasis added.)

Hospital administrators are mad. But this is what health care reform needs to look like. Cost-cutting measures must be supply-side. We should be focusing on holding the hospital’s accountable for the totality of care, and rewarding those that do it well.

So, given all this, why is the health care debate so focused on tackling the big-bad insurance companies? Indeed, when is the last time you heard a representative seriously talk about doctor accountability? I think this is wrong. There is more to be gained (either by lowering costs, improving health, or both) by tackling the other vested interest – the health care providers themselves.

Today, we got some bad news from the International Energy Agency. The IEA reported that energy related CO2 emissions in 2010 were the highest in history.

After a dip in 2009 caused by the global financial crisis, emissions are estimated to have climbed to a record 30.6 Gigatonnes (Gt), a 5% jump from the previous record year in 2008, when levels reached 29.3 Gt.

This, of course, at a moment when leaders of the Republican party are in full climate-change denial mode (at the behest of their enlightened base.)

Look, I understand that environmental problems are hard to address politically for myriad reasons, not the least of which is that consequences will be felt far in the future and are thus easily ignored. I get that politicians want to deal with the short term (what will get them re-elected) rather than the long term (what will save their children’s children).

But guess what? Climate change isn’t all flooded coastal towns circa 2100. Climate change has near term consequences, too. To see climate change’s consequences unfold in real time, just look beyond our borders to Australia.

In Australia there is little doubt that climate change is real. For more than the past decade, Australia has experienced what locals call The Big Dry – rainfall well below the historical average, and well below what Australians require to survive. Over the next week, I’ll recount a few stories from Charles Fishman’s The Big Thirst about how a few Australian cities are dealing with their dwindling water levels. The stories are nothing short of fascinating. They show how water is a strikingly personal resource, how that makes the politics of water fierce and challenging and how we are, as a people, shockingly unprepared.

As you might imagine, after living in a world with access to a seemingly unlimited supply of water, water scarcity is not an easy problem to solve. Addressing it not only requires expensive desalination plants and water recycling systems. It requires fundamentally changing the way we think about water.

Let me be clear, the point here is not that the we should all be water scarcity alarmists now. We don’t need to be, yet. The point is that we should see Australia’s example as a cue to start the conversation. We can disagree about how to solve tough climate-related problems like water scarcity. That is a reasonable debate to have. But to deny climate change’s existence so as to preempt the possibility of such a debate? That is just irresponsible.

Worried about health care reform? Need a dose of inspiration? Do yourself a favor and read Atul Gawande’s Harvard Medial School commencement speech.

In comparison to all the politically charged rhetoric around “rationing” and health care reform, Gawande is refreshingly honest, in both his description of the problem and prescription. Here’s Gawande, laying the smack down:

Two million patients pick up infections in American hospitals, most because someone didn’t follow basic antiseptic precautions. Forty per cent of coronary-disease patients and sixty per cent of asthma patients receive incomplete or inappropriate care. And half of major surgical complications are avoidable with existing knowledge.

In other words, the medical profession is too complex for doctors to go it alone any longer. There is no room for cowboys. Doctors need to act in tandem with large teams – pit crews – to provide quality care.

Still, at the risk of being a bit obvious, this is an important but small part of the solution. When will the science of health care delivery catch up? When will we be able to capture the huge amount of patient data and analyze it to provide better care? Yes, doctors need to change the way they approach their profession. But this seems simple (or at least manageable) when compared to the administrative and political challenges involved in fundamentally changing the science of health care delivery itself.

I have always had an aversion to health care rationing. Why? Because shouldn’t I be able to get all the health care that I want, if I can pay for it?

I know this is wrong. Enough people who know much more about health care reform than I have told me that I am wrong. But I was never convinced, until I read through Ezra Klein’s pass at a definition of “rationing”:

My hunch, however, is that the only thing that’s really rationing is the thing your doctor tells you is rationing. If he can’t start you on a fourth drug regimen because the insurance won’t pay for it or the government says no, that’s rationing. If he doesn’t start you on a fourth drug regimen because he doesn’t think it’ll help and the focus now has to be on making you comfortable and trying to get you into a clinical trial, well, that’s just good care.

This is a very helpful distinction for me and, indeed, the way we should be talking about rationing. Rationing will always exist. But, ideally, the doctor has my best interest at heart. He or she will make the decision that is best for me. I can buy that.

Also, I should mention that from a rhetorical perspective this is powerful because the onus is put on the insurance companies and the government, rather than the doctor.

But as a recent convert, I still think there is an issue here. How good are doctors at making that decision? Is the decision to forego the fourth drug regimen as clear cut as Klein makes it out to be?

Perhaps not. As Aaron Caroll, over at The Incidental Economist, argued recently, there are two issues here. One is that often “doctors just don’t have the evidence to make good decisions.” But even when they do…

It’s a lot more complicated than that. Physicians are human beings, and just as susceptible to biases as you are. It’s no easier to change their minds, or their behavior, than anyone else’s.

Aaron Carroll is a physician by the way.

So, it’s not that our doctors are not smart enough. It’s just that they are human. And while our understanding of medicine gets better every year, it is still (understandably so) not perfect. So, when confronted with a scared and sick patient, I imagine deciding between different types of care is often very difficult. And if the doctor has trouble making this decision, how can the insurance company or the government ration care responsibly?

At the end of the day, the point of rationing is to reduce health care costs while maintaining an equitable level of care. I like Klein’s distinction. But, unfortunately, I’m not convinced that the world he describes could ever exist. At least not until we have a much better understanding of the comparative effectiveness of different procedures.